The Competition Bureau has laid criminal charges against six people for allegedly engaging in a deceptive telemarketing scam in Quebec that robbed 10,000 Canadian businesses out of more than $4 million between April 2002 and September 2003.
The Bureau, which received over 90 complaints about this scam, said Infosearch Publications sold business directories that contained thousands of company names for an average of $352 each to small businesses, chambers of commerce, schools, not-profit organizations and Aboriginal band councils. The company is also alleged to have operated under www.isp411.net to lure victims to pay a “listing fee” in exchange for access to an Internet-based directory.
The accused, who worked for the now defunct Infosearch Publications Inc., were served with a court order last Thursday stating a series of charges under the Competition Act.
“It’s a major trend,” said Gilles Morrissette, senior competition law officer at the Bureau. “Instead of having a product the trend is to have a virtual listing. You could have access to an Internet database and consult the index.”
The Bureau is an independent law enforcement agency that oversees the application of several pieces of legislation including the Competition Act to ensure promotion and maintenance of fair competition in the marketplace.
The charges allege the accused failed to provide identification, what product is being promoted, the nature of the call, the purpose of communication and the material conditions related to delivery of the product. The Bureau also alleges the defendants gave out false and misleading information by pretending to have a former relationship between them and the company.
Two of the accused, Bobby and Maria Kok(k)inasidis, were also charged for a breach of a June 2002 Prohibition Order, which bars them from engaging in deceptive telemarketing for 10 years. A preliminary hearing date has been set for February 8, 2006 at the Quebec Superior Court in Montreal. Before that date, the accused are required to present themselves to the RCMP for fingerprinting and identification.
Tom Copeland has been getting calls from companies like Infosearch for 12 years now but says more schemes involve the use of the Internet.
“We don’t see this as being any different than the brick and mortar scams that have been raging forever,” said Copeland, Canadian Association of Internet Providers chair. “This particular company added the Internet to its repertoire.”
For the investigation, which began in December 2002, the Bureau enlisted the services of the City of Montreal Police Service (SPVM) Fraud Squad to aid it with search operations that were carried out at Infosearch’s Montreal offices.
As for the outcome of the trial, both Morrissette and Copeland agree that stiffer penalties need to be handed out to prevent fraudsters from re-offending. In many cases, companies set up shop again within six months under a different name.
“From our point of view these sentences are never too high compared to the crime they’re making in terms of numbers,” said the Bureau’s Morrissette. “Here in Canada we have to show the court this crime is really serious.
If the accused are found guilty, they could face a fine (the amount is at the court’s discretion) and up to five years in prison.